Financial Awareness - Risk, Stability & Emerging Finance
Which entity acts as the intermediary between investors and the depository for holding and transferring securities in dematerialized form?
Which entity acts as the intermediary between investors and the depository for holding and transferring securities in dematerialized form?
medium Q15 of 15
Step-by-Step Solution
Step 1: Understand the depository system
Depositories hold securities in electronic form, but investors do not interact with them directly.Step 2: Identify the intermediary role
Depository Participants (DPs) act as agents of depositories and maintain demat accounts for investors.Step 3: Eliminate other options
Clearing Corporations handle settlement, stock exchanges provide trading platforms, and Registrars manage issuer records.Final Answer:
Depository Participant → Option BQuick Check:
Investor ↔ DP ↔ Depository ✅
Quick Trick: DP = investor’s gateway to NSDL/CDSL
Common Mistakes:
- Confusing Clearing Corporation with Depository Participant roles
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